6 Tips to Reduce Your Debt Before Graduation

Enter the "real world" with an upper hand. Life is way more fun without the burden of debt shackled to your ankles.

An FKD Feature exclusive

College: it’s all fun and games until you graduate and have to start paying your bills.

That’s not to say college should be devoid of any fun — but taking some time to complete six simple steps while you’re still in college will help you reduce your debt. Then you can enter “the real world” with an upper hand. Plus, you’ll soon learn that life is way more fun without the burden of debt shackled to your ankles.

Step 1: Stop bleeding money! Create a budget now and stick to it

Plenty of college students would rather sit for extra finals than actually create and stick to a budget in college. Who wants to be doing extra work outside of class anyway?

College is one of the best times to start developing the life-long skill of budgeting. You don’t need to track every penny that you earn and spend (although it certainly isn’t a bad idea). If you can simply determine how much you can afford to spend each month or week, you’re well on your way to success. Your best bet to keep your budget simple (and easy to follow) is to decide to stay within an allocated amount of money, but not to micromanage down to “$20 for food, $30 for gas and $40 for beer” (it is college…). This way, you can live within your means, but still not stress about your budget.

Creating and sticking to a budget makes it possible to graduate college in less debt – or even with no debt at all.

Step 2: Keep applying for scholarships throughout college

Scholarships aren’t just for incoming freshman. There are college scholarships available through your school, your community, outside organizations and eccentric donors for students of all ages and backgrounds.

Spend a few hours each semester researching and applying to new scholarships. Some are incredibly niche — for example, a scholarship is in place for candy obsessed students with a 3.0 or higher GPA who are studying food science, chemistry or biology with a demonstrated interest in confectionary technology — while others are a bit more broad – like one for students who win a common knowledge contest.

A few hours researching and applying could earn you thousands of dollars to help ease the cost of college.

Step 3: Get a job

Getting a job while you’re still in school isn’t just important for your financial future, but it looks great on a resume too. Explore the opportunities at your school to work on-campus. There are usually jobs for students with financial need (work study) as well as for students who don’t qualify for financial aid. If you’re interested in helping students transition into living alone for the first time, resident assistant positions are usually open to all students, provided you can ace the interview.

If it’s easy to get off campus, look into paid internships or jobs in your local community. Try to learn a skill that will help post-graduation, and yes that can mean bartending. If finding a career job is tough once you graduate, it’s always nice to have a few years of work history when applying as a waitress, bartender, barista or retail salesperson while you look for your big break.

Use the money from your job to dig yourself out of — or stay out of — debt.

Credit cards can be a valuable tool in college: if you use one responsibly it will help you build your credit history and credit score. Having a strong credit score after college will make it easy to find an apartment or take out a loan for a car or home once you’re ready to do so.

If you’ve already tangled with credit cards and gotten into debt, start aggressively paying it down before graduation. Always pay more than the minimum due, because the high interest rates on credit cards makes it hard to chip away at the principal balance. If you feel a credit card makes it too easy for you to spend money, consider switching to using primarily cash or a pre-paid card.

Step 5: Start paying your student loans while you’re still in college

Speaking of interest rates…let’s not forget about those student loans!

First, it’s important to find out whether your loans are subsidized or unsubsidized. Subsidized loans do not incur interest during while you’re still college, while unsubsidized loans do.

If it’s possible to pay off a subsidized loan during college, you won’t pay a cent of interest. For many students, this isn’t a reality. However, putting at least some money towards subsidized loans during college make it easy to reduce the principal due before interest kicks in. This could save you hundreds or thousands of dollars after graduation.

Students with unsubsidized loans should strongly consider making payments during school to help chip away at the interest already accruing.

Step 6: Build a nest egg

Students fortunate enough to enter school without taking out too many student loans should spend four years of college building a small nest egg. Even putting aside $10 a week throughout college months can build a fund of nearly $1,500 to help with the deposit on an apartment after graduation, or to lay the foundation for an emergency fund. Even students with debt and loans would be well served to save up at least $1,000 so when an emergency eventually arises (it’s almost always car trouble) to avoid taking on even more debt.

Even if you’ve already started your second semester senior year, set a goal to have a certain amount saved by graduation. Reaching a savings goal before graduation can help you feel a tremendous sense of accomplishment before you even get to throw your cap in the air.

The more work you can do to relieve debt burden before graduation, the freer you will be to pursue a career you want, live in an expensive city or travel the globe for a few months once you graduate. What are you waiting for? Start today.

Have a savings tip of your own? Comment below or join the discussion on Facebook.